Good afternoon, everybody, and welcome to Jalles Machado's conference call, where we will discuss the results of the second quarter of the crop year 2022-2023. This conference is being recorded and is translated simultaneously. The replay will be available at the company's website at ri.jallesmachado.com. All participants will be in a listen-only mode. After the presentation, we will have a Q&A session when further instructions will be given. The earnings release and the presentation of the second quarter of crop year 2022-2023 can be accessed on the company's IR website. Before proceeding, I would like to mention that any statements that may be made during the conference related to the company's business prospects, forecasts, operating and financial targets related to its growth potential are based on the company's management's expectations about the future of Jalles Machado. Such expectations are highly dependent on domestic and foreign market conditions and national and international economic scenarios, and therefore are subject to change. Today with us are Mr. Rodrigo Penna, CFO and IRO. I would like to turn it over to you now, Mr. Penna. You may proceed. Thank you very much, Doris. Good afternoon, everybody. It is a great pleasure to have you once again with us in our earnings conference call. We just arrived from the new unit, Santa Vitória, and we had our first board meeting there. We had our board meeting yesterday to approve the results. Some board members had never been there. We took advantage of that occasion to celebrate the closing of this crop year at the Santa Vitória unit. Everybody in the board was very excited, and I was very excited too about the potential and the prospects for our new unit. We just arrived and came straight to talk to you about our results. I will try to be very brief in my presentation. We disclosed a material fact yesterday also about the closing of the crop year. I'm going to talk about the operating results, but actually the numbers that you see in the material facts are more updated than the ones that you will see here in the presentation. I will start. Actually, I'm going to skip through the slide five about operating data and slide six as well. I'll jump straight to the commercial highlights. Since our sector is very seasonal, I'm always going to talk about the year-to-date numbers here in our call. Okay? I believe that you all have received the materials, so I'll try to be brief so that we can have more time for Q&A. Our sugarcane price, actually the sugar price was 11% higher. As you saw in our release, we were able to increase the amount of organic sugar and increase its impact on our numbers if you look at the first half of this year in comparison with last year. That happened due to some improvements in the logistics. We struggled a lot in the first half of 2022, but now things improved. We saw some decreases in maritime freight costs. In the first test that we ran, everything was all right with exports of big bags in the hold of the ships and not in containers. We're not at the same levels as before, but containers used to cost $10,000 or $9,000, but now the number is closer to $5,000 or $6,000. It used to be $1,500, but things are better than last year, at least. For ethanol, our average price was BRL 3.57 against BRL 3.59, and this is the gross price, but there's an important factor here. You can see that last year we didn't have any anhydrous ethanol. This year we sold a lot of anhydrous ethanol, and there is a different tax system for anhydrous in comparison with hydrous ethanol. The price for anhydrous is always lower than hydrous ethanol. We can see that the average is a little bit above the previous year. In this quarter, let's take a look at the quarterly results just for anhydrous ethanol. You can see that we sold almost 54 million liters of anhydrous ethanol. You can see that we knew how to take advantage of anhydrous ethanol in the beginning of the year when there was a change in the fuel tax system. We had a higher demand for gasoline, and we took advantage of that moment to sell. Almost 70% of this volume was sold actually in the month of July for a good price. You can see that we have already sold 133 million liters. You can see we sold much more than last year. As for sanitizers, we had a decrease because that more critical moment of the pandemic is now behind us, and we are now more strict about margins. There was an oversupply in the market when the pandemic came to an end, so the volume decreased. We preserved our margins. The number, the amount sold was lower because of the situation now about the pandemic. Now, CBIOs, we sold about 7,000 CBIOs due to a drop in prices after that change. We decided to hold back a little bit. In the first quarter, we had taken advantage of that situation, as we mentioned in our previous call. Now the average price is BRL 145, and the volume is pretty much the same. Now CBIOs are exceeding BRL 100 in the market. We should go back to selling CBIOs in this current quarter. Now the total TRS sold, and this is a very important point for us. You can see that our sales improved against last year, so 65% of our total TRS this crop year has already been sold. Last year, the number was 57%. That happened because we wanted to take advantage of prices of ethanol in the first quarter. In the second quarter, we also sold a lot of anhydrous ethanol in July and August. Now let's talk about the financial highlights. Our revenues, our net revenues increased by 30%. Our COGS, as you can see, grew faster than revenue. We had an increase in costs exceeding the growth in revenue in the first half of the year. Our adjusted EBIT decreased by 4 percentage points in comparison with last year, but the volume is much larger. We have 20% more in our adjusted EBIT. The margin increased by, actually decreased by 4 percentage points, but adjusted EBIT increased by 20%. Our margin increased also in comparison with last year for the adjusted EBITDA, and the net income was BRL 997 against BRL 105. Here we have some non-cash variations in MTM, so our cash results increased by 70% year-on-year. Now let's take a look at the costs. The costs increased significantly. Our sugar equivalent produced increasing costs by 26%. The highlights are agricultural partnerships with 32% and industrial cost with 34%. This is less representative than the cost of sugarcane as a whole, but it had a significant impact on the costs of inputs and also maintenance of the crop. In the first half of the year, with one ton per hectare less in TRS than last year, we had an increase of 26% in costs. That crop failure had an impact and caused this number to increase even further. We had a 4% impact in our TRS, but as of September, it was closer to 6%. This number should be closer to 20% if it weren't for the crop failure. We have here the impact in dollars, which increased by 30%. Now CapEx. We are still investing in increasing the Jalles Machado capacity in the Otávio Lage unit. We are investing in the industrial capacity and agricultural capacity, and our investments are being made according to plan. We're sticking to the physical and financial plans. We are not changing our guidance at all. Just so you remember, we invested part of the amount this year and part this year. This year, we are going to invest more than last year. Then next year, we are going to invest the third part of the whole amount. As you know, we want to increase our production by 1 million tons in each unit. You can see, in both units actually, and you can see here that we had 46 million in expanding against 19 million. Here we have the CapEx for expansion of the planted area going from BRL 5.7 million- BRL 10.3 million. Here we have the fixed assets, which is part of the expansion and improvement CapEx line. This line, the fixed asset line, refers to the improvements made by the company to gain performance, EBITDA, and also to replace equipment to change the machineries as we do every year. You should consider those two components in this line. This number is invested in operational improvements and other investments as well. Now, recurring CapEx. We had renewal planting and off-season maintenance amounting to BRL 105 million, and our total CapEx was 74% higher year-on-year, which is natural when it comes to fixed assets. Also when it comes to planting and crop management, we had an increase in costs because of the more expensive inputs and fertilizers. That, of course, has caused an impact on our investments since the costs of these inputs are going up. Good news is that the prices for inputs are now going down. Fertilizer prices have been decreasing. Diesel, not so much, but we can see a downward trend for the next crop year. We had raised funds as we disclosed to the market with debentures. We did that in September. We had already raised funds late last year in December. Now this year, we did it again to increase our cash since we had the acquisition of Santa Vitória. As disclosed, we were to disburse about BRL 540 million for the Santa Vitória unit. We took that loan, and we decided to prepay BRL 90 million of that debt, so our total disbursement was BRL 630 million. Even though we have the acquisition of Santa Vitória, we still have a very comfortable cash position in excess of BRL 1 billion even right after the closing of the Santa Vitória deal. Now, net debt, we had an increase year-on-year of BRL 72 million. One thing that I would like to highlight on this slide is that we, the new debenture issued by us in the amount of BRL 350 million, this is our repayment schedule. Our average term went up to 4.8 years, 15.6% short term, and 84.4% long term. We are at a moment at the company in which we have longer term debts, and our liquidity position is very positive. This has always been a policy of the company to keep a good, liquidity position due to the seasonality of the business and the need of working capital in the sector. Here you can see our debt broken down by currency, only 12% in U.S. dollars and 88% in Brazilian reals. Now, about hedging. You can see that all sugar, the conventional sugar, has had the price fixed in the level of 1.7. Considering our track record premium, we are selling sugar in the domestic market for 1.9. We also have fixed the prices for all the sugar produced in 2023-2024, and 92% of the sugar in 2024 and 2025 has been fixed at 2.3. Our exposure to foreign currency has decreased. We have brought that down to almost zero. In the short term, we have an exposure. We decided to do that because of the volatility. Now, of course, considering the political scenario in Brazil, the political turmoil now after the presidential elections, we decided to not have any exposure in U.S. dollars. Now let's take a look at the consolidation between the acquired companies. This is a pro forma result. This is what Jalles Machado would look like had we consolidated all the numbers. You can see that our gross revenue would be 34% higher, reaching BRL 1.405 billion. The net revenue would be 38% higher, EBITDA 36% higher, and adjusted EBIT 31% higher. Even when we do consolidate the results of the Santa Vitória unit, we should keep the pro forma numbers because we are going to consolidate the numbers from April onwards. We are going to use the numbers in a pro forma basis from April to September, and then we are going to start consolidating the numbers. When it comes to Santa Vitória, we have the same strategy of producing only ethanol because of the higher prices in the beginning of the crop year. We decided to produce as much ethanol as possible in the beginning of the crop year, and we sold plenty of ethanol during that part of the year. Santa Vitória had 50 million liters of ethanol with fixed prices with a distributor. 50 million liters had already been fixed with a gross price of BRL 3.5, and almost BRL 3 was the net price to be delivered until the end of the cycle. That's what caused us to take advantage of the higher ethanol prices. Both Jalles Machado and Santa Vitória in the first half of the year sold a higher percentage of the total TRS produced. Now, in the second half of the year, we are going to have lower revenue over the next six months. The performance and margins won't be at the same level as the first half of the year because we are going to see lower ethanol prices and also because we sold most of what we produced. As I said, it was 65% this year in comparison with 50% last year. Now, I wanted to give you more details about why we had a crop failure this year. It was actually below our guidance. Our guidance was issued in accordance with what our agricultural team believed was going to happen. In the second half of the crop year, there was a higher failure. I wanted to explain to you exactly why that happened. The blue bars show rainfall at the Jalles Machado unit from September through April, which is when we start building our crop. In September and October, that's when drought ends and rain starts to pour. The gray line is the historical rainfall. The same applies to the Otávio Lage unit, but I'm going to focus on Jalles Machado because it's the same logic. What happened this year is that we started with good rainfall. October, it rained more than expected, and November as well. In December and January, we had excess rainfall, and that caused us to have a cloudiness, excessive cloudiness. That's why we had a stall in the growth of our sugarcane. The weather was too cloudy. We had lower photosynthesis, and the sugarcane did not grow as would be appropriate. In February, we had good rainfall. When March came, in the second half of March, there was a drastic decrease in rainfall. In April, when we have about 80 millimeters-90 millimeters, which is very important for the sugarcane to grow for a longer period, we had little rainfall. That's why in the second half of the crop year, we had higher failure. That's what happened. Excessive cloudiness and then the rains stopping before expected. That's what caused the failure. Although the total rainfall was very good, almost 1,600 millimeters in comparison with an average of 1,300 millimeters, as is our historical data, but it was not so well distributed. Another very important point is related to irrigation, and this is all about conventional sugarcane. We excluded organic or organic sugarcane so that we could exclude some variables that are not so common for the entire field. So this applies only to conventional sugarcane. We wanted to assess the behavior of the sugarcane in comparison with our expectations when we have supplementary irrigation, when we apply salvage irrigation, and in no irrigation fields. We didn't have any failure in the areas that receive supplementary irrigation. We had a failure of 3.7% in the salvage area, and we had 8.6% of failure in the dry lands with no irrigation. Our neighbors who don't have irrigation had a failure of about 13%-15%. Jalles Machado had a crop failure of 7% in TCH, in the tons of sugarcane per hectare, while our neighbors had 14%-15% failures in terms of tons of sugarcane per hectare. Since our TRS was higher than the failure was of 4% when it comes to TRS. You can see that our irrigation was able to mitigate the failure. The failure should have been even, more impactful if we didn't have such a good irrigation structure at the company. Now let's talk about the closing of the crop year on slide 17. As I said, we had a 7% decrease in productivity in yields in comparison with last year. Our total TRS was 4% lower. You can see that our total TRS was lower year-over-year. In Santa Vitória, our expectation was to reach 1.9 million tons of sugarcane, and the Grupo Geribá and the unit itself expected to reach about 2 million, and it was actually 1.8 million. As we mentioned before, if it exceeded 1.9 million, we would have an earn-out, so we would share the results. If it was below 1.9 million, we would also adjust prices and share the lower results. The lower production will be split between the parties, the buyer and the seller. What affected Santa Vitória the most, causing the numbers to be lower than expected, was a very harsh drought last year, and they were not able to recover as they thought they would. TRS was 154. You can see that the sugar content was very high and, the ethanol produced, hydrous ethanol was 165. That's it on our side. We try to focus in the presentation a little bit more on the information about the closing of the crop year and also fiber and the pro forma non-audited Santa Vitória results. Now we can start the Q&A sessions, and we are here to take any questions you might have. Thank you. Okay, we will now begin the Q&A session. To ask a question, please use the Q&A button at the bottom of your screen. If you want to open your microphone, please type in the Q&A fields that you would like to ask a question, and your microphone will be activated when your name is called. You can also type in your question in the Q&A field, which can be found at the bottom of your screen. If you are connected over the phone, you can also ask questions. In this case, please type star nine on your phone, and after your name is called, you will hear instructions to press star six, which will allow you to activate your microphone. Please press star six only once. The first question comes from Pedro Fonseca with XP. Hello, good afternoon, Rodrigo and the Jalles Machado team. Thank you very much for taking my question. First of all, I would like to know more details about the current status of organic sugar and if the new exports modality affects in any way the contracts and if there's any room to adjust prices. If you could give us more color on that, it would be great. The second question is about sanitizers. What can we expect for the size of this line in your revenues looking forward? You said in the beginning of the presentation, Rodrigo, that you are more selective now in terms of margins. If you could give us more qualitative details about the decrease of margins, and if there's room to decrease the margins even more, and what is your perspective about that issue, that would be great. Thank you. Thank you very much, Pedro. These are great questions, and thank you very much for being here, for your interest in Jalles Machado. Well, about organic sugar, well, we decided to adopt this new modality to reduce the impact of the container prices which reached $9,000 or $10,000 in a container of 20 tons. We're talking about $500 per ton, and that number used to be lower than $100. From $100- $500 in a product like sugar. Conventional sugar, for example, is about $300. You can see how big the impact of freight costs were on our clients. Clients needed to renegotiate the conditions that they had with the other parties, and they had to absorb part of those costs, at least in the beginning. That's why the impacts took a little while to show in our results. Of course, we needed to take care of many things so that we could decrease the costs. Now, Pedro, now that the costs are indeed decreasing, I think that the new modality is similar to the container prices. Now, when it comes to prices have been stable. They are the same levels of last year. A little bit below 5% in difference because the prices increased so much. The prices for the end consumers increased so much because of freight. For us, freight costs we believe freight costs will now show a downward trend. I think that the prices will improve over time. As the prices, the freight prices go down, I believe that we will be able to improve our prices. We are working with the same levels as last year. Just a little bit above. The second question, Pedro, was about sanitizers, right? Okay. Well, the prices of sanitizers depend on the opportunity costs of ethanol. Of course, we are talking about consumer products, and our work is more focused on B2B, not so much on B2C. Even on the B2B side, the prices don't fluctuate so fast as wholesale ethanol that we sell only to distributors. We try to be conservative, of course. Over time, we want to get prices that will add value to the ethanol that we produce. The volume increased so much because of the pandemic. As you know, the consumption of sanitizers increased so much, it skyrocketed. Now the consumption has gone down. It is now at a much lower level than the peak of the pandemic. The sanitizers were actually sold at supermarkets and end consumers, and the type of alcohol that was sold at the supermarkets during the pandemic was usually sold only to hospitals. It could not be sold to end consumers in supermarkets, for example. That is the type of product that we sell the most, the 70% alcohol. The size of the market is now back to the pre-pandemic levels. Everybody was producing such a high volume, which caused an oversupply in comparison with demand, and prices had to go down. We decided to hold back a little bit because it wouldn't be sustainable to be below the market price. Okay, thank you very much. Just to confirm that I got it correctly. Potentially with the return to containers, potentially you could catch up with organic sugar prices? It depends on many factors actually. Theoretically, if the final price is the same as it is now, if there is a reduction in the freight costs, then we would have some room to increase prices. There are many other variables involved in relation to supply and demand. We don't want to give you the impression that we are going to increase prices. I would say that our expectation is to keep prices flat and not to increase them. Okay, thank you very much. Just a very important point, Pedro, just to complement my answer. That price, the price that we had last year and the price that we have this year, will give us a higher premium because conventional sugar is retreating and organic sugar has not. It has become stable or flat. There was actually a small margin increase, lower than 5%. The next question comes from Henrique Brustolin with BTG Pactual. Good afternoon, Rodrigo. I have two questions. The first one is about crop year 2022-2023. I would like to know more about your process of reviewing your expectations throughout the crop year. As you announced the guidance, after you announced it, when did you realize that the productivity was lower than expected? And if the only reason behind that was rainfall, as you said in the presentation, or if there was any other factor? And also about TCH, which was a little lower than expected, how is that going to carry over to crop year 2023-2024? Do you think you can recover and increase your yields in the next crop year? About Santa Vitória, I would like to know the next steps and your expectations to reach the full crushing capacity of the unit, which is 2.7 million tons. Also about margins. Looking at the past six months, the margins are very similar to Jalles Machado's, although the yields are much lower. What can we expect for margins going forward? Also, what are your expectations about it, about what's going to happen as you increase yields in that asset in Santa Vitória? Well, thank you very much for your questions. I'll start with the first one. As we saw the shortfall happening, and we already thought there, that there would be a shortfall when we disclosed our guidance. In November, December, our expectation was to have a positive surprise or failure of 5,400. In April, the rains, the rain stopped, and in April, there was very little rainfall. In June, we disclosed our guidance, and we expected the failure to be about 5,200 or 5,350, expecting, of course, to be closer to 5,200. As we said, in the second half of the crop year, the sugarcane suffered a little bit more. That caused failures to be more impactful than we expected, especially in the beginning of the crop year. Now, about recovering our yield in the next crop year. Since our sugarcane has, I would say 40% of our yield is irrigated in the salvage modality and in 20% of the fields we use supplementary irrigation, I believe that we are not going to need to make any changes in our fields. The quality is very good, but we didn't have sufficient rainfall for sugarcane to grow. It is all going to depend on the rainfall period starting in September. We had some rainfall in September, which is not usual in the region. In October, rainfall was below average, so we don't know. We need to wait a little bit more. The field is in a wonderful condition. It is fertilized. The population of sugarcane looks very good as well. Everything is in place for our yield to recover, but it is all going to depend on the rainy period starting in September through April. Usually, it goes from October through April, but we had about 40 millimeters of rainfall in September. 40 or 50 millimeters in the Otávio Lage unit. In the Santa Vitória unit, we had good rainfall in September and October as well. Rainfall looks good there this year. Again, we are still in the beginning. We have too little to tell you about what the crop year will be like. The two agricultural teams have been working together, sharing management practices. The practices that we had at Jalles Machado are already being implemented there in Santa Vitória. Actually, we started doing that much before during the signing period. Also after the guidance was disclosed, we started to implement our practices in Santa Vitória because we see the results of what we do this year, only next year. You renew the sugarcane fields for five years. The earlier you start, the faster you will get to the 2.7 million tons capacity. Now, your third question. When do you expect to reach the 2.7 million tons? We expect to reach that in crop year 2026. We believe that we are going to reach that capacity of 2.7 million tons in four crop years from now. How is that going to be done? We are going to increase our yield and also increase the expansion areas. There is a very important point that I would like to mention here. Since the signing phase from that period to now, we actually increased our area in 4,500 hectares, and we are going to plant 2,200 hectares in 2023 so that we can see the results in 2024. By doing that and also putting new practices in place and renewing the sugarcane fields, we are going to reach the 2.7 million tons, and we are going to use more productive varieties as well. With the agricultural practices that we know that work here at Jalles, we are going to implement them at Santa Vitória to help us reach our goal. One of the goals that we set for Santa Vitória, and one of the things that we took into consideration when we decided to acquire Santa Vitória, was that there was a very good area surrounding it without so much competition against other farms and other units. We are surrounded by water in that region. The average radius of the unit, it's about 23 km-25 km. The areas, the lands that we are signing contracts for in agricultural partnerships have an average radius of that is lower, that is shorter, but with a very good soil quality. We are very happy about this, and I think that we have everything in place to reach our goal. We are going to plant 2,200 hectares this year and another 2,200 hectares in the next year. We already have contracts for those areas. I think that's the three questions that you asked, right? Have I answered all of your questions? Yes, you have. Thank you. We now have a question from Gabriel Barra. Gabri el is asking two questions. He said, "Hello, Rodrigo. Thank you very much for taking my questions. The first one is about capital allocation. One of the IPO promises and one of the company's focuses was the acquisition of a new plant, Santa Vitória. From now on, what should we expect in terms of M&A deals and inorganic growth? Do you think you still have opportunities for potential M&A transactions? What about other projects, biogas and ESG, for example? The second question is. If you want, I can repeat the question for you, Rodrigo. The second question is about taxes. Looking forward in the next year, there is still a lot of uncertainty about the impact of ethanol taxes in the domestic market. My question is: What is your perspective about mix and investments in this scenario, and how to mitigate that impact on your results? If you could give us more color about this topic, it would be very helpful. Thank you. Thank you very much, Gabriel, for participating. Well, first of all, about capital allocation, you are correct. Our plan during the IPO included two growth avenues: inorganic. We are now with everything in place to reach that goal. Also, we acquired. We closed the first M&A deal in the history of the company. Over the next four years we're going to focus very much on that. We acquired a new company, but there is a lot to be done. As I was saying, part of that job is to reach 2.7 million tons in capacity in Santa Vitória, and the investments have already been made. The industry is ready to take on that capacity, including the thermal energy plant. We want to reach that goal as fast as possible and as sustainably as possible with higher yield. Also an appropriate cost level for the region and for the company. At Jalles and Otávio Lage, we are also pursuing the 1 million ton target. We are going to add 1 million this year and another million next year. We are going to focus on optimizing those investments, the investments made in the M&A deal and the existing assets. Right now we are not considering another M&A transaction for inorganic growth. We want to execute our investment properly. We invested actually more than we thought we would during the IPO, due to the strong cash generation in the company over the past years. We are actually going beyond what we promised during the IPO, and that's our focus. We want to execute things properly and deliver on our promises, so that we have a good performance at Santa Vitória as we have in the other two units. That performance is actually above the average in the sugar and ethanol industry. Now, about other projects, biogas for example. We are very interested in it. It is in our radar. We are paying attention to this possibility. This year, in our partnership with Albioma, we are producing biogas at Otávio Lage, and the construction is going well. That is a biogas project, but it has lower value added. We are going to produce vinasse biogas to inject in the boilers and increase energy production. We are going to learn a lot from that process together with Albioma at the Otávio Lage unit. We want to take that lesson to the Jalles Machado unit. We want to build an even larger project with higher value added, and that is in our radar for sure. We are paying close attention to that. We decided to delay it, postpone it a little bit, because we are focusing so much on the M&A deal and the investments that we decided to postpone it a little bit, but we are going to take a closer look to it again next year for potential investments in 2024 or 2025 if we decided to make that investment. About taxes, indeed, there is a lot of uncertainties. As you saw on the press, probably, there's a lot of uncertainty about the federal taxes. The government will probably need to exceed the cap next year, and with the public debt, the government will probably have to waive BRL 32 billion if they kept the lower taxes. We believe that PIS and COFINS taxes will come back next year. We don't know if it's going to happen in total or in part, but we believe that it would be the responsible thing to do on the part of the government. Also the ICMS tax caused a lot of impact on the state's tax revenue. Next year, this year it was not such a big problem because the tax revenue in some states was very high in the first half, so that offsets the impacts on the second half, but not next year. Some changes were made to taxes in other sectors as well, for example, electricity. The states are claiming that there is some unconstitutionality in some of the measures that were taken. Now there is a whole conversation between the federal governments, the state governments and the judicial branch to find a common ground. What was on the press recently is that they were considering keeping the reduction of taxes on the energy bill and diesel and ethanol, but since gasoline is a fossil fuel, there wouldn't have that limit of 17% or 18% according to each state's ICMS model. That is a possibility which would be positive for us. It would be positive for the ethanol industry. Considering the current ethanol prices, those changes would be interesting because they would give us better price and a better margin. There's another piece of good news for next year. We can see a downward trend in the price of fertilizers and other inputs. Indeed, nothing is certain. There's no way for us to tell for sure which way we are going to go, especially now that the government, the administration is changing. I think that the federal taxes will come back. I'm not so sure about the ICMS taxes. I think that we just have to wait and see what happens. Thank you. About the first question, you were talking about ethanol, and I was thinking about the exposure that you have now with the Santa Vitória unit. Maybe you could invest more in greater flexibility in the company so that you can choose to pivot in case the scenario changes. Well, that's a very good question. We are constantly assessing all alternatives. At the Santa Vitória unit, we can produce anhydrous ethanol as well. We only produce hydrous now, but we can produce anhydrous and also sugar. Even considering the first two years with a premium that is above the market history, it is not really feasible. It would be feasible only to improve mix, but not really to increase crushing or volumes. We are now analyzing or considering the possibility of producing anhydrous ethanol there too. We are still in the early stages of our analysis, but we believe that it could be a good investment with a good return. Considering what we did at Jalles Machado last year, we spent about BRL 25 million. It would be more expensive to do that now for sure. We believe it would be about BRL 35 million-BRL 40 million, but we have not made any decision yet. We are still considering the possibilities. Okay. When we produce sugar, there are some things that we need to take into account. For example, you reduce the production of energy, and you have to make greater investments in the plant. There are many variables that we need to account for and see if the investments would be feasible or not. Indeed, our mix will lean more towards ethanol since Santa Vitória only produces ethanol. We believe that sugar is going to decrease in the share in the mix by about 10 points. Thank you very much, Gabriel, for your question. Well, we are now going to take our last question from Christian Audi with Santander. Christian, you may proceed. Hello. Hello, Rodrigo. Good afternoon, Christian. Thank you very much for participating. No, thank you. Thank you for taking my question. About capital allocation. Considering everything that you said about the M&A deals and other projects, what is your perspective about dividends considering the outlook for next year? The second question, going back to your explanation about the potential impact of the PIS/COFINS taxes if they come back. What is going to be your budget like next year? As you said, we don't have a crystal ball. We don't know what's going to happen. But I'm curious to know how you are going to prepare for the changes that might happen in the tax system. Okay, the first question is about dividends. The minimum dividend policy in the company is 25% of the profit, and it can reach up to twenty to forty actually, 40% if our debt over EBIT is lower than two. Having said that, we should reach 25% in our dividends, because even with the acquisition of Santa Vitória, our debt will be below that level. We are still going to be able to distribute dividends in the amount of 25%. We should remember that our net debt position does not include the acquisition of Santa Vitória. Because we are considering BRL 705 million plus the price adjustment and earn-out. Price adjustment and the earn-out will happen over the coming months, and that disbursement has not been made yet. In the next quarter, we are going to see that impact. Still, the leverage level will be very comfortable. The second question, Christian, what was it again? Oh, okay, it was about ethanol. Well, the law says that that exemption should end in December. There's nothing established in the law for January onwards. In January, the PIS and COFINS taxes should come back. As we said earlier, anything can happen. We are working with the possibility of seeing those taxes coming back. With the current ethanol levels, we have decided to continue selling ethanol. We have been doing that since it reached the current levels of three. Because if you think about what's going to happen from January through March, even if the taxes come back, the ethanol gasoline parity will still be good. It's all about risk management. As I said, it is more likely that PIS and COFINS taxes will come back, and there is a discussion about the gasoline ICMS tax increasing again. Those two points could favor the ethanol market, but we don't know. We have to wait and see. Just to finish, when it comes to inflation, we know that we have been through a very high inflation period. What do you think is going to happen? Are the costs going to remain high, or do you think that it's going to stabilize in some sectors? What do you think? Well, I believe that higher costs next year will be a reflex of what happened this year. This year, when it comes to costs, I believe that it was the peak. For example, NPK was over $6,000 per ton. It reached $1,200 per ton. In general, the price is back to $600, and some are about $500. You can see that it is half of what it used to be. That brought the cost to $3,500 per ton. Also the chemicals that we use for the production of conventional sugar and ethanol, those prices have decreased also. They reached a peak, but now there is a downward trend. Now, diesel has not come back to the prior levels. Even in the international market, the prices are very high. It is a significant input. It is very important in our supply chain since we use 100% own sugarcane. I think, Christian, that 2022 was the peak year for costs. Next year we believe that things are going to go back to a normal level. We are working on our budget right now, and we believe that we are now going to see the prices increasing again as it happened over the past two years. Okay. Thank you. Thank you, Rodrigo. With that, we conclude the conference call. Rodrigo, if you have any closing remarks, please go ahead. Well, I just wanted to thank you very much once again for participating and for your interest in Jalles Machado. I believe that the results were very solid, even in the second quarter with market conditions that were not so positive. Still we were able to post very solid results. This half of the year was a record-breaking period for us. We had the best results that we have ever had in the company, and the Santa Vitória pro forma results were very good as well. We are very happy and excited about the challenges ahead of us. See you in the next conference call where you are going to see the Santa Vitória consolidated numbers. Thank you very much. Have a great day. This concludes Jalles Machado's second quarter 2022/2023 conference call for today. Thank you very much and have a nice day.